MEDIA WATCH

Open for business-but no sale

George Bain June 20 1988
MEDIA WATCH

Open for business-but no sale

George Bain June 20 1988

Open for business-but no sale

MEDIA WATCH

George Bain

Robert Maxwell, the Czechoslovakian-born publisher of—among many other things—the chirpy Daily Mirror, the London tabloid, has talked recently about being hot on Canada. He already has a one-quarter share of the new English-language newspaper the Montreal Daily News and a piece of Donohue Inc., a pulp and paper company. In both of those he is joined with Pierre Péladeau, of Quebecor Inc., who also publishes tabloids in Montreal, Quebec City and Winnipeg.

Maxwell has said that he intends to invest large sums of money in Canada— perhaps as much as $1 billion. Not all of that necessarily will be in publishing. The interests of Maxwell Communications Corp., which had worldwide revenues last year of just over $2 billion, are broader than that. But communications would be the main field, and the investment, whether in existing or new enterprises, necessarily would be in company with Canadians. The question is whether Maxwell, who seems to like to run things, would be happy for long confined to minority positions by Canadian law on media ownership.

Maxwell himself just lightly touched on the question when he said at a news conference in London last month that he respected Canadian law but thought the restrictions of media ownership too strict. To that, he added an observation to cause the blood to run cold in the executive offices of internationally minded Canadian media companies—assuming that blood there ever runs any other way—namely, that “if Canadians are to have the right to acquire companies in England or in America, they cannot have discriminatory laws the other way around.” That kind of talk, suggesting that exclusion invites exclusion, can be disquieting to news firms with large investments abroad and looking for more.

In 1985, Ottawa was in a bind to know what to do about the acquisition by the U.S. conglomerate Gulf & Western Inc. of the book publisher Prentice-Hall Canada Ltd. Along with U.S. PrenticeHall went its Canadian subsidiary. Three facts made life miserable for the Canadian government: first, it recently had proclaimed a policy that said that any Canadian book publishing firm acquired by foreigners would have to be sold to Canadians within two years. Second, the Prentice-Hall sale predated the policy by a few weeks, but for every Ca-

nadian who accepted that the policy therefore did not apply, there were two probably who believed that it was being scuttled. And finally, to force Gulf & Western to sell Canadian Prentice-Hall by what might seem in the United States to be retroactive action would not accord well with another new policy— which Mulroney proclaimed in New York City in the words “Canada is open for business again.”

Eventually, in March, 1986, a compromise was reached (“Ottawa drives a soft bargain,” declared the nationalist Toronto Star) that was more or less satisfactory to more or less everybody. But, before that, one who had advised against stopping Gulf & Western—this in a “personal and confidential” letter that subsequently leaked—was Allan Gotlieb, Canadian ambassador in Washington. In the letter, to Sinclair Stevens, then-minister of regional industrial ex-

The depiction of Canada as the endangered Little Orphan Annie of a rapacious world still goes down surprisingly well

pansion, he also said that Gulf & Western would resort to a “scorched earth” policy—never explained—if forced to give up Prentice-Hall. Another who made the same argument—first in a Nov. 13, 1985, telephone conversation with Charles McMillan, then-senior policy adviser to the Prime Minister, and later, at McMillan’s invitation, in a letter for the Prime Minister’s eyes—was John A. Tory, president of The Thomson Corp. Ltd., who clearly had thoughts on what scorched earth might mean.

Along with several substantial arguments against interfering in Gulf & Western/Prentice-Hall, including the one about the apparent conflict between that and a policy welcoming new investment, Tory acknowledged a direct Thomson interest. As “the largest foreign owner of U.S. publishing businesses,” the company wanted to persuade the government not to take a “poorly thought out, counterproductive and discriminatory” action that “could lead to retaliation against Canadian owners of U.S. publishing businesses.” (Copies of a memorandum McMillan wrote for his own file, and of the Tory letter, came to me unsolicited.)

The latest count of Thomson dailies in the United States is 115. (When The Thomson Empire, by Susan Goldenberg, was published in 1984, the total was 88.) But the newspapers, while scarcely small potatoes, are only a corner of Thomson’s publishing empire in the United States. In the Goldenberg tally, it included, along with an amazing array of special-interest magazines—extending from the stately American Banker through Oncology Literature News to Two-Way Radio Dealer—Van Nostrand Reinhold Inc., New York City, and Wadsworth Inc., San Francisco, both of whom are publishers of college textbooks, other educational materials and professional and reference books. If there was earth that the administration could be persuaded to scorch, the Thomson organization was standing on quite a bit of it.

Conrad Black of Hollinger Inc. is best-known as a publisher abroad for his having bought control of The Daily Telegraph, the biggest of London’s quality dailies, and a more recent interest in The Spectator, the opinion weekly. However, American Publishing Co., a U.S. subsidiary, has put together just since December, 1986, a tidy package of 44 dailies in northeastern and central states—responsible for a substantial portion of Hollinger’s 1987 U.S. revenues of $42 million. The Toronto Star is in book publishing in a big way in the United States, via Harlequin Enterprises Ltd. The Toronto Sun has been, and may be again, in daily newspaper publishing there.

None of this is to argue that Canada needs to back off in haste—or at all— from a policy of keeping Canadian media Canadian-owned—although arguments do not spring lightly to mind to make a persuasive case that The Times of London is less English because a Canadian, Lord Thomson of Fleet, owned it, and it is now owned by the Australian-become-American Rupert Murdoch, or that the Telegraph is different in character since Conrad Black took it over. What it is to say is that we have come too much out in the world to go on with the “poor little us” line fundamental to the defensive pleadings of ingrown Canadians. It won’t wash any more. The depiction of Canada as the endlessly endangered Little Orphan Annie of a rapacious entrepreneurial world still goes down surprisingly well at home, but has begun to be viewed elsewhere with well-founded skepticism.